Can we second selloff of the markets? History says YES

After the extremely overbought selloff triggered by bubble FAANMG stocks, we may be in store for a second leg down after today's FOMC statement.

Comment:

As most probably know now, the false breakout above the super steep trendline on SPX was an incredible short opportunity, that all lined with DJI election year seasonality on September 2.

This is shown in the attached idea: "Short NDX at historic overbought levels"

Comment:

I am a huge fan of seasonality. During the last 7 elections there has been a selloff into October on or around the SEP quarter FOMC statement. Combined with quad witching this week for options, I see no reason why this cannot happen.

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The projected seasonal profile to the end of the year is shown as the dimmer yellow dots.

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VIX futures had an expiration for the September contract yesterday on the 15th, the entire curve must be put into backwardation, which means a further expectation of volatility to the next contract expiration on October 20.

i.imgur.com/XmNV7ww.png

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Remember that S&P 500 futures hit an unprecedented overbought level with the % distance from the 200 Day Moving Average (DMA) at the top of the bubble.

This kind of reading above 15% (bottom indicator) has not been achieved since 2009, and before that 2000 and 1999.

Comment:

I believe DJI will be the major index to watch for guidance into October.

The measured move for this potential head and shoulders top (right at the FEB 21 gap fill and Trump tweet I might add) would be around the 25500 - 26000 area, potentially backtesting the broken dotted trendline.

Comment:

NDX rolling over with new SEP lows today with the "hooking" of the MACD down. Not good (if you are long). But, good for us!

Comment:

New weekly lows on AAPL, hits 20% total correction. Follow the money and the dark pool blocks shown on the screen and in text form below.

#BlockSummary
SEP 18 2020, 11:04 AM EDT

VOL (K) | PRICE ($) | 🔼
--------.-----------.----------
📈 $AAPL
--------.--(SEP16)--.----------
● 860 | 115.30 | 💔 -6.34%
● 2,400 | 115.15 | 💔 -6.22%
1,600 | 113.55 | 💔 -4.90%
--------.--(SEP15)--.----------
1,907 | 118.38 | 💔 -8.78%
● 856 | 116.75 | 💔 -7.50%
994 | 115.96 | 💔 -6.87%
1,000 | 115.38 | 💔 -6.40%
--------.--(SEP14)--.----------
1,395 | 114.78 | 💔 -5.92%
● 1,048 | 114.50 | 💔 -5.69%
--------.--(SEP11)--.----------
1,154 | 114.68 | 💔 -5.83%
--------.--(SEP09)--.----------
2,663 | 117.30 | 💔 -7.94%
--------.--(SEP08)--.----------
1,000 | 115.93 | 💔 -6.85%
--------.-----------.----------

💲 Block level ($)
● Confirmed dark pool block
💔 % BELOW block level
💚 % ABOVE block level

Comment:

Next support for SPY would be the big 40 million pink block level near 322. We can likely see some kind of Monday follow through since we had a 1% or greater move on a Friday.

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Head and shoulders break on DJI futures, target shown for the measured move.

Pattern site: thepatternsite.com/hst.html

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SPY bounces from 40 million dark pool level and June high. Good place to take some profit on short.

If you followed my original idea you would be up about 320 points on SPX now since SEP 2.

Comment:

Eventually russell will require a retest of the 200 DMA, inevitable.